Homes selling for $500 but here's what you should know before buying

A Detroit home. Photo: AP

Sixty-two thousand properties have faced foreclosure in Detroit this year over unpaid taxes. About half will likely be auctioned for $500 apiece this fall.

Buying homes or vacant lots for $500 might sound inviting, even in a city as troubled as Detroit.

After all, look at New York: Decades of crime and decay gave way to a real estate boom that has gentrified even outlying working-class neighborhoods.

Properties that sold for thousands in the bad old days are now worth millions.

But there are no guarantees. "The opportunities are there but there are huge challenges," said Dang Duong, a law and business student at the University of Michigan who has bought and renovated several dilapidated homes in Detroit.

"If you're under the impression you can buy a property for $500 and wait a few years until Detroit has recovered, that's going to be difficult."

Here are five things to consider before buying property in Detroit.

Are you prepared to evict former owners, longtime tenants or even squatters? Loveland Technologies, a mapping company that has surveyed every property in Detroit, estimates that half the properties facing foreclosure are occupied, housing about 100,000 Detroiters.

Critics question the morality of buying occupied homes and fear the program may increase Detroit's homeless population. They say many owners stopped paying taxes because they weren't getting city services in return.

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Homes selling for $500 but here's what you should know before buying